Understanding investment risk

There’s a range of valuable tax allowances you could use to grow and help protect your savings.

From ISAs to pensions, making the most of these opportunities – by investing for the long-term – could make a real difference to your financial future.

If you’ve not thought about investing before, you might be unsure about the idea of taking risk with your money. But what does it actually mean to take risk, and why do so many people do it?

Well, it’s all about you and your personal circumstances. With the help of an adviser, you might find there's a level of risk that’s right for you. To give yourself a better chance of achieving higher rewards with your money.

What is Investment Risk?

Watch our short video which explains what investment risk is, why it's important when investing your money and how it could affect your returns.

You might be in a position where you're prepared to take some risk, with part of your money, with the aim of achieving a higher return on your investment. This usually means investing your money into stock market-based investments, and tends to work in the following way(s):

  • The more risk you’re prepared to take, the greater the potential reward.
  • But that also means there’s a higher chance of losing some or all of your capital.

If you want to find out more, you can request a call back for an initial consultation.

At Skipton Building Society, the job of our financial advisers is to help you understand how risk and reward works, the benefits, and of course, the pitfalls. We do this by providing recommendations tailored to your circumstances.

FA Adviser couple with ipad

How does investing work?

We typically recommend to our customers that they invest their money in a fund (or variety of funds) for a period of 5 years or more.

The fund is managed by a fund manager who places capital into a range of assets. This could include shares, property, gilts and cash. With the aim of benefiting from its value increasing over time. In doing this, the aim is to increase capital value, income or a combination of both.

Yet, there are no guarantees that this will happen. The risk lies in the possibility that the assets – and with it the fund – could fall in value, causing you to lose money when you encash your investment.

It’s also vital to note that each fund is different, and each one takes on different levels of risk. This is why it’s important to invest in funds that match your risk and reward outlook, and that suit your circumstances.

Your Skipton financial adviser will help you understand your feelings towards risk

So, what can we do?

From our point of view, you can be assured that you’ll never be advised to invest in a product that hasn’t been fully explained to you, including the level of risk you’d be taking.

We'll first take the time to help you understand your true personal feelings to risk and reward, so we can research and present recommendations that match it from our carefully selected panel of investment options. Start investing with a lump sum of £20,000 or £500 per month.

Louise Allott

Our recommendations will be tailored to your specific goals and circumstances including your feelings towards risk, and how much of your investments you can realistically afford to lose without affecting your standard of living.

Louise Allott, Senior Financial Adviser.

In summary

You can be sure that we will never recommend for you to invest into a fund that you don’t understand, or, that doesn’t suit your risk appetite.

And, when we do provide you with advice, you’ll be given all the time you need to decide if it’s right for you. There’s no pressure from our side to accept our recommendations.

Important information

Our proposals are likely to include stock market-based investments. These aren’t like bank and building society savings accounts, as your capital is at risk and you may get back less than you invested. The value of your investments and any income from them, may fall as well as rise.

If you’re interested in finding out more, get in touch with a member of our team today or ask us to give you a call back.

Get in touch and get started

For more information on our service and to find out whether you could benefit from financial advice, call our team today for a free initial consultation.